Fate of British Steel in the balance as urgent funding talks with Government continue

Talks are continuing over the future of British Steel between the company's owners and the Government

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The fate of British Steel could be decided today as urgent talks between the company, its owners and the Government continue.

Reports this morning suggested the company was on the brink of collapse for the second time in less than a week, with 4,000 direct jobs in Scunthorpe and thousands more across the supply chain at risk.

The latest development comes a week after British Steel was first said by Sky News to be in talks with the Government over an emergency loan of £75 million to allow it to continue operating.

Two days later, the Scunthorpe-based steel giant confirmed it had "the required liquidity" to continue "operating as normal".

But this morning, steelworkers and their families woke up to more worrying reports from Sky News, saying it was becoming "increasingly likely that the firm will fail to secure a Government bailout to save it from going bust".

And the broadcaster said it understood administrator EY was expected to be formally appointed tomorrow unless an agreement is reached with the Government today.

Sky News city editor Mark Kleinman said he had been told a final deadline had been set by British Steel of 3pm for a deal to be done.

He said: "A number of deadlines have come and gone and last night a further deadline of 8pm was missed for the loan to be signed and secured.

"As a result the lenders and directors seem to have lost patience and have now set a final deadline for 3pm today, beyond which they have said they have resolved to put the company into insolvency."

This morning's reports claimed the firm has reduced the amount of money it is asking for from the Government from £75 million to roughly £30million, with British Steel's major shareholder also pledging to chip in extra funding.

The company, which has been owned by private investment firm Greybull Capital since it bought Tata Steel's Long Products Europe business for £1 in 2016, is facing significant challenges, blaming Brexit and tough trading conditions.

British Steel said it would be making no immediate comment this morning but steelworkers, unions and MPs have emphasised the importance of the company - and the industry - to the Scunthorpe area and the country as a whole and urged all parties to ensure it could survive.

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'The Government needs to step in and support us' - workers

An employee who has worked at the steelworks for more than 30 years warned of the potential impact on the area if British Steel were to go to the wall, comparing it to Redcar in Teesside, where the SSI steelworks closed in 2015 with the loss of 4,000 jobs.

The worker said: "I'm just upset that it’s not being sorted. I personally have been to Teesside before and after the Government failed to support them, it’s heartbreaking to see the state of the town, its people and the environment, it's like a ghost town.

"I do not want that to happen to my town and to the people I have grown up around and with.

"The Government needs to step in and support us. Imagine the cost of thousands of people out of work and potentially having to claim benefits, compared to assisting the steelworks to continue working. The business makes money hand over fist."

Another worker said: "I work as a bricklayer at BOS plant and it’s all everyone is talking about, the threat of people being laid off. No-one is concentrating on the job that needs to be done, but who can blame them, to be fair?

British Steel workers in Scunthorpe have expressed concerns following reports over the future of the company (Image: PA)

"It will ruin the town if this place goes under. It’s a shame, much more than a shame, that a lot of people could end up in real financial trouble - that can't be the best solution."

Writing on Facebook, Stew Austen said: "All the people saying that Scunthorpe steelworks will never close, the steelworks in Teesside was a much more up-to-date one and they closed it down without hesitation, reducing a massive area into a ghost town within a year.

"It's not negative to say it but the reality is that if it doesn’t shut down, it will at least have a massive redundancy moment."

MP and unions on the importance of staying focused on finding a solution

Speaking to Scunthorpe Live, the town's MP Nic Dakin said it was important for all concerned to remain focused on finding a solution to the crisis.

He said: "All we have heard this morning is more speculation. We have to recognise that the people close to this process are working very hard to resolve it and we need everybody including the Government, Greybull, British Steel management and trade unions to continue to focus on resolving this issue.

"This is a sound business but because of issues outside its control, mainly the decision to leave the EU, and that has been made a mess of by the Government, which has precipitated this crisis."

Scunthorpe MP Nic Dakin (Image: Scunthorpe Live)

Mr Dakin said British Steel's importance stretched far beyond scunthorpe and the other areas where it has sites.

He said: "It is right and proper that the Government does everything it can to ensure this business survives, which is not only crucial to our area’s economy but the UK because it is a strategic business.

"No independent nation can hold its head high without having its own steel-making capacity."

Redcar MP Anna Turley, who like Mr Dakin is a member of the All Party Parliamentary Group on Steel, said: "The Government has to step in. The impact of a huge number of job losses, 4,000 and more in the supply chain, would be devastating for Scunthorpe.

Steel production is viable. British Steel is struggling to compete when other countries are much more a supportive of their steel industry. It’s devastating to see an industry that should be thriving on the ropes."

Redcar MP Anna Turley said she felt the Government had to step in to prevent the collapse of British Steel (Image: Evening Gazette)

Union leaders also called on all involved in the talks to do everything possible to ensure a positive solution.

Ross Murdoch, national officer for GMB, said: "Given this latest speculation, these are understandably extremely difficult times for our members.

"Yesterday the Government, alongside trade unions and employers, signed a UK Steel Charter at Westminster.

"They must now put their money where their mouth is.

"GMB calls on the Government and Greybull to redouble efforts to save this proud steelworks and the highly skilled jobs."

A spokesman for the Unite union said: "It is vital that Greybull reaches a deal with the Government. Thousands of British Steel jobs and many more in the supply chain depend on it. Unite will be urgently speaking to Government ministers."

And speaking to BBC Radio Humberside, Community union national secretary Sean Scorer said: "What we want to focus on today is the people that are making the decisions on behalf of 25,000 families here in Scunthorpe and in the North East, not just today but more importantly, the bigger picture and the future of a whole range of communities.

Community union national secretary Sean Scorer

"if we lose 25,000 people from the supply chain across this town, it will never, ever recover and get back to where it needs to be so regardless of what the figure is, I really don't care, just sort yourselves out, get the money on the table and make sure this steel manufacturer has got a future today, this week, next week, next year and the years after that. That is what is really important here."

Government leaving 'no stone unturned'

In a statement in the House of Commons, Business, Energy and Industrial Strategy Minister Andrew Stephenson said the Government would leave "no stone unturned" as it seeks to support British Steel through its current cash crisis.

Underlining the £600 million financial pressure on the company it eased last month with a £120 million commercial loan to help British Steel meet its responsibilities under the EU Emissions Trading Scheme (ETS), he said: "The speculation regarding the future of British Steel will no doubt be creating uncertainty for those employed by the company. As showed through the ETS agreement the Government has been willing to act."

"We have been in ongoing discussions with the company, and I am sure the house will understand that we cannot comment in details at this stage. We will however update the house when there is more information available.

"I can however, reassure the house that subject to strict legal bounds the Government will leave no stone unturned in its support for the steel industry."

Business, Energy and Industrial Strategy Minister Andrew Stephenson, speaking in the House of Commons about British Steel (Image: Parliament TV)

Last week, British Steel admitted it was facing significant challenges but was working towards a "permanent solution" to secure future work and financial stability.

In an email to employees sent on Thursday, chief executive Gerald Reichmann said there was "positive news" about the future of the company but also "a number of challenges in addition to Brexit".

In a statement released on Thursday, a British Steel spokeswoman said: "British Steel has the backing of its key stakeholders, including shareholders and lenders, and operations continue as normal.

"As the business navigates the significant uncertainties caused by Brexit, and explores options to strengthen the business for the long term, we are pleased to confirm that we have the required liquidity while we work towards a permanent solution.

"We are grateful for the support that our stakeholders and the British Government have provided to date."